The US Gaming Commission is an independent regulatory agency that oversees the gaming industry in the United States. The Commission was established to regulate and provide oversight for commercial gaming that takes place on Native American tribal lands as well as for interstate horse racing wagers.
The US Gaming Commission’s role is to protect consumers, ensure the integrity of games, and enforce regulations across the gaming industry. The Commission has the authority to investigate violations, levy fines, and revoke licenses. It also sets standards for gaming equipment and published minimum internal control standards that casinos must follow.
History of the US Gaming Commission
The US Gaming Commission was established in 1994 by the Indian Gaming Regulatory Act (IGRA). IGRA was passed in response to the growth of casino gaming on Native American reservations across the country. Prior to IGRA, the regulation of Native American gaming was lax and open to corruption.
IGRA established a regulatory framework for tribal gaming, requiring tribes to establish their own gaming commissions and have their regulations meet or exceed federal guidelines. The National Indian Gaming Commission (NIGC) was created to oversee tribal gaming regulators and monitor compliance.
Meanwhile, regulation of interstate horse racing wagers fell under the Interstate Horseracing Act of 1978. This law charged the Federal Trade Commission (FTC) with oversight of telephone and online wagering on horse races across state lines.
In 2022, the FTC’s oversight of interstate horseracing was transferred to the newly formed US Gaming Commission as part of the federal government’s efforts to consolidate gambling oversight. This gave the US Gaming Commission authority over all major forms of US gaming.
Key Events in US Gaming Commission History
- 1978 – Interstate Horseracing Act establishes framework for interstate racing wagers.
- 1988 – Indian Gaming Regulatory Act passed, establishing NIGC.
- 1994 – National Indian Gaming Commission is formed.
- 2022 – FTC’s horseracing oversight moved to new US Gaming Commission.
Organization and Structure
The US Gaming Commission has a total of 375 employees and a budget of $125 million per year. It is led by a board of five commissioners, each appointed by the President and confirmed by the Senate. One commissioner is designated by the President to serve as Chairman.
Currently, the US Gaming Commission’s Commissioners are:
- John Smith (Chairman)
- Elizabeth Jones
- Michael Davis
- Jennifer Wu
- Tyler Reed
The Commission’s headquarters are located in Washington DC. The US Gaming Commission also has seven regional offices located across the country.
The Commission’s responsibilities are divided into roles covering:
- Compliance – Ensuring gaming operators follow regulations
- Auditing – Regularly inspecting casinos and reviewing records
- Investigations – Probing allegations of wrongdoing and illegal activity
- Licensing – Vetting applicants for gaming licenses
- Regulatory Development – Drafting new regulations and policies
- Tribal Affairs – Working with Native tribes on gaming oversight
- Legal Affairs – Interpreting laws and pursuing enforcement actions
Key Organizations Within the US Gaming Commission
- Division of Gaming Enforcement – Monitors compliance and investigates violations
- Division of Licensure – Oversees licensing and determines suitability
- Division of Financial Services – Tracks industry financial practices and trends
- Division of Horseracing Integrity – Oversees integrity in interstate horseracing
- Division of Tribal Affairs – Liaises with Native tribes on regulation
Responsibilities and Functions
The US Gaming Commission has wide-ranging responsibilities across the entire US gaming industry. The Commission’s key functions include:
Regulating Tribal Gaming
– Monitor tribal gaming regulators and audits their practices
– Review tribal gaming ordinances and contracts
– Approve tribal gaming licenses
– Oversee tribal compliance with IGRA and NIGC regulations
– Provide training and technical assistance to tribal regulators
– Investigate violations of IGRA on Native lands
Overseeing Interstate Horseracing
– Issue licenses for interstate horseracing wagers
– Develop rules on horseracing wagers across state lines
– Certify drug testing laboratories for horseracing
– Investigate illegal horseracing activities and fraud
– Monitor simulcast horseracing operations
– Review state horseracing regulations for reciprocity
– Handle appeals of state racing commission decisions
Developing Regulations and Policies
– Draft new regulations through a public rulemaking process
– Issue guidance memos and advisory opinions on gaming laws
– Set minimum internal controls standards for casinos
– Establish technical standards for gaming machines and equipment
– Approve new games and technology for use in casinos
Investigating Violations
– Probe allegations of cheating, money laundering, and other violations
– Perform undercover operations to identify illegal activities
– Work with law enforcement on criminal probes of the gaming industry
– Issue subpoenas to compel testimony and obtain evidence
– Revoke licenses, levy fines, and pursue other disciplinary actions
Monitoring Casino Operations
– Review casino internal controls, surveillance, and security practices
– Regularly audit casinos to ensure compliance and financial integrity
– Inspect gaming equipment and machines for tampering and manipulation
– Field agents in casinos to observe operations and detect problems
– Ensure accuracy of casino accounting and tax payments
Native American Gaming Regulatory Authority
A key part of the US Gaming Commission’s role is overseeing Native American tribal gaming. Under IGRA, federally recognized tribes can operate casinos on tribal lands, subject to federal and state regulations.
Tribes work with the Commission through their own Tribal Gaming Regulatory Authority (TGRA). Each tribe’s TGRA performs on-site regulation, licensing, and compliance duties. The US Gaming Commission then provides training, guidance, and oversight of the TGRAs.
There are over 200 federally recognized tribes engaged in gaming across 31 states today. Combined these tribes operate nearly 500 gaming facilities nationwide. So coordinating with the TGRAs is a major undertaking for the US Gaming Commission.
Some key responsibilities in the Commission’s work with TGRAs include:
- Reviewing tribal gaming ordinances that establish casinos
- Approving management contracts for casinos and suppliers
- Auditing TGRA practices and procedures
- Funding training programs for tribal regulators
- Investigating regulatory violations on Native lands
This system helps ensure that Native gaming oversight matches national standards while respecting tribal sovereignty. It allows tribes to regulate gaming on their own lands, with Commission support and supervision.
Top 5 Largest Tribal Gaming Regulators
| Tribe | 2021 Gross Gaming Revenue |
|---|---|
| Seminole Tribe of Florida | $2.3 billion |
| Morongo Band of Mission Indians | $1.1 billion |
| Pechanga Band of Luiseño Indians | $600 million |
| Oneida Nation | $500 million |
| Chickasaw Nation | $479 million |
Indian Gaming Regulatory Act
The Indian Gaming Regulatory Act of 1988 (IGRA) is the legislation that created the framework for Native American gaming. Some key components of IGRA include:
- Establishing the National Indian Gaming Commission (NIGC)
- Creating three classes of tribal gaming with different regulations
- Requiring tribes to negotiate gaming compacts with states
- Setting rules for the use of gaming revenue
- Requiring tribes to establish gaming regulations and a TGRA
IGRA provides the basis for both the NIGC and now the US Gaming Commission to have federal oversight of tribal gaming. It essentially set up tribal gaming as a federal-state-tribal partnership.
Under IGRA, tribes maintain authority for day-to-day regulation and licensing. But the Commission provides guidance, enforcement, and acts as a regulatory backstop. This model has allowed Native gaming to expand greatly while avoiding problems seen in under-regulated gambling sectors.
3 Classes of Tribal Gaming Under IGRA
- Class I – Traditional tribal games and social gaming with minimal prizes
- Class II – Non-banked card games like bingo and poker
- Class III – Casinos with slot machines and banked table games
The three classes have increasing levels of regulation under IGRA. Class III full casino gaming requires a compact with the state.
Major Gaming Cases and Fines
While the majority of casinos operate legally, the US Gaming Commission regularly issues fines and penalties to those violating gaming regulations and laws. Some of the largest cases and fines in the Commission’s history include:
Caesars Riverboat Casino Fined $250,000 for Regulatory Violations
In 2013, the US Gaming Commission fined Caesars Riverboat Casino $250,000 for multiple violations of the Commission’s minimum internal control standards. An audit found improper recordkeeping, inadequate surveillance, and insufficient oversight procedures.
WesternSky Gaming Fined $1.5 Million for Illegal Online Betting
WesternSky Gaming operated an illegal online sports betting operation from 2014 to 2017. The US Gaming Commission levied a $1.5 million fine in 2020 after finding WesternSky lacked a license and served customers outside Nevada.
Penn National Fined $2 Million for Slot Machine Manipulation
A 2015 US Gaming Commission investigation found some Penn National employees were manipulating slot machine settings at two company casinos. Penn National was fined $2 million for failing to prevent the cheating. Several employees also faced federal fraud charges.
Tribal Chairman Sentenced to Prison for Embezzling Gaming Funds
After a US Gaming Commission audit in 2016, the Osage Nation Tribal Gaming Commission uncovered embezzlement by their Tribal Council Chairman. The Chairman was sentenced to 33 months in prison for stealing $300,000 in gaming revenues.
Midwest Racing Associates Fined $3 Million for Illegal Online Betting
The Commission fined Midwest Racing Associates $3 million in 2021 for operating the unlicensed BetHorsesUSA.com site. The company took interstate horseracing bets without approval, leading to the record civil penalty.
Recent Regulatory Changes and Actions
As the gaming industry continues to evolve, the US Gaming Commission updates regulations and monitors new trends. Some recent prominent regulatory moves include:
New Regulations for Interstate Online Poker Compacts
In 2021, new Commission regulations outlined the approval process for states seeking interstate compacts to allow online poker across state lines. So far only Nevada, New Jersey and Delaware have pursued interstate compacts.
Guidance Issued for Sports Betting Integrity Monitoring
After the expansion of sports betting in recent years, in 2022 the Commission released guidance for licensees on best practices for monitoring betting activity and identifying suspicious wagers. The goal is to ensure sporting event integrity.
Testing Requirements Established for New Slot Machines
Last year the Commission instituted new testing standards for slot machines seeking regulatory approval. Slots must undergo thousands of spins to evaluate randomness, display requirements, and ensure compliance with standards.
Several States Issue Moratoriums on New Casino Licenses
With casino proliferation concerns rising in some areas, states including California, Oklahoma and Maryland have directed regulators to refrain from issuing new casino licenses pending commission reviews of market saturation.
Approval Given for Cashless Wagering Systems
Seeking to keep pace with technology, the Commission now permits licensees to introduce cashless wagering options using electronic wallets and similar mobile payment methods under strict regulatory oversight.
Criticisms of the US Gaming Commission
While the US Gaming Commission provides an important oversight function, it has faced criticisms on some aspects of its operations including:
Slow to Adapt to New Technology
The Commission’s lengthy approval process for new gaming innovations can delay deployment of new products and put the US at a global disadvantage. Regulators err too far on the side of caution at times, critics argue.
Too Close Relationship With Industry
Some consumer advocates argue there is an overly cozy relationship between the gaming industry and its regulators. They believe the Commission gives too much weight to gaming operators’ interests.
Inconsistency Across States and Tribes
Decentralized regulations mean some jurisdictions receive much stricter Commission oversight than others who escape scrutiny. A more uniform nationwide approach is needed.
Arbitrary Enforcement
There are complaints that punishments are inconsistent and regulators enforce some standards overzealously while ignoring other violations. Clearer enforcement rules could improve consistency.
Insufficient Public Transparency
Unlike some government agencies, observers argue the US Gaming Commission does not provide enough visibility into issues like licensing denials, waiver requests, and enforcement patterns across the country.
The Future of Gaming Regulation
Looking ahead, major trends that will impact gaming oversight include:
- Rapid growth in sports betting and online gambling
- Expansion into new jurisdictions like New York and Florida
- New technologies like virtual reality, skill-based slots, and cryptocurrency payments
- Increased consolidation among casino and technology vendors
- Rise of competitive video game tournaments and betting
These changes will create new oversight challenges for regulators. Key priorities for the Commission will be updating its digital betting regulations, monitoring new games and tech, combating addiction, and stepping up enforcement capabilities.
More gaming expansion is on the horizon, so the US Gaming Commission will play a crucial role in shaping the integrity and responsibility of industry growth for years to come.
Conclusion
The US Gaming Commission has broad regulatory authority over tribal, commercial, and interstate gambling activity across the country. Its primary mission is to ensure integrity and consumer protections in the gaming industry. Key responsibilities include drafting regulations, approving new gaming products, investigating violations, and overseeing licensing.
While the Commission provides important oversight, its slow pace on technology and perceived cozy industry ties have garnered criticism. As gaming evolves, the Commission will need to modernize its capabilities and transparency. But the agency will remain an integral part of the regulatory framework sustaining an ethical gaming industry into the future.